Positive factors less likely to drive CAD than draggers:
Trump’s protectionist declarations, notably labelling NAFTA as the “worst trade deal in the history of the country”, make the Canadian dollar especially vulnerable in the weeks ahead. Clinton has been ahead in the polls most of the time, but Trump is again catching up.
Clinton’s lead is less than two points, suggesting that the election outcome is likely to be very uncertain until the vote. The threat weighing on Canada’s status as a privileged trade partner should be increasingly discounted by FX markets.
In addition to that BoC’s dovish shift biases near-term CAD weaker: The BoC September policy meeting was dovish, as the bank significantly shifted the risk profile to inflation from “roughly balanced” to now “tilted somewhat to the downside”.
The commodity-related Canadian dollar was also hit by tumbling crude price on Friday due to reports that Iran's August crude oil exports jumped 15% to a five-year high of more than 2 million barrels per day, sparking fresh concerns over a global supply glut. Supply adjustment or an OPEC deal causes crude to pierce $60/bbl earlier than expected.
USDCAD has been trading sideways in a range for months but is currently testing an important resistance area. A decisive break of the 1.32 region would open the door for fast gains.
From the nutshell showing delta risk reversals of USDCAD, you can probably make out that the pair has been one of the most expensive pairs to be hedged for upside risks as it indicates calls have been relatively costlier over puts which indicate upside risks of spot FX is anticipated and hedging for such risks is relatively more expensive.


Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays
Singapore Tightens Monetary Policy Amid Middle East War Inflation Risks
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing
2025 Market Outlook: Key January Events to Watch
Bank of Korea Governor Nominee Warns of Action if Korean Won Weakens Further
Bank of Japan Governor Signals Accommodative Stance Amid Negative Real Rates
Moldova Criticizes Russia Amid Transdniestria Energy Crisis
Bank of England Set to Hold Interest Rates as Inflation Risks and Iran War Impact Loom
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge
Energy Sector Outlook 2025: AI's Role and Market Dynamics
DOJ Ends Probe Into Fed Chair Jerome Powell, Boosting Kevin Warsh Confirmation Prospects




